Broadcom will buy VMware in a cash-and-stock transaction valued at $61 billion, based on the closing price of Broadcom common stock on May 25, 2022, the companies announced Thursday.
The deal would be one of the largest technology acquisitions of all time, behind Microsoft’s pending $69 billion deal to purchase Activision Blizzard and Dell’s $67 billion purchase of EMC in 2016.
Broadcom’s stock closed up 3.5% on Thursday, while VMware shares ended the day up 3.1%.
Broadcom’s purchase of VMware will help the company diversify away from its core business of designing and selling semiconductors into enterprise software, which can have larger margins. VMware’s products are used by enterprises to more efficiently run their own servers as well as cloud servers.
Broadcom is the most acquisitive semiconductor company and has strategically used mergers to fuel its growth in recent years. It previously purchased CA Technologies in 2018 for $18.9 billion and Symantec in 2019 for $10.7 billion.
But Broadcom had not made a large acquisition since 2019. In March, Broadcom CEO Hock Tan said the company had the “capacity to do a good-sized acquisition.”
Broadcom planned to purchase Qualcomm in 2018 for $117 billion before the deal was hampered by then-President Donald Trump, who cited national security concerns.
VMware spun off from Dell late last year in an effort to pay off debt. Dell originally acquired the company when it bought EMC in 2016. Michael Dell, founder and CEO of Dell, owns about 40% of VMware.
Alongside the acquisition announcement, Broadcom also reported fiscal second-quarter results on Thursday that beat on the top and bottom line, while it provided upbeat guidance for the third quarter.
Broadcom posted quarterly adjusted earnings of $9.07 per share, well ahead of consensus estimates of $8.70 per share, according to analysts surveyed by Refinitiv. Revenue grew 23% year over year to $8.1 billion, higher than Wall Street’s expected $7.9 billion, according to Refinitiv.
The company gave a revenue outlook for the current quarter that sailed past consensus estimates, guiding for sales of about $8.4 billion. Analysts surveyed by Refinitiv were expecting revenue of just over $8 billion.
Tan said in a statement that Broadcom saw strength in its networking and server storage units during the second quarter. “We expect this momentum to continue into the third quarter,” he added.
"*" indicates required fields
Software Asset Management is a business practice that involves managing and optimising the life cycle of software within an organisation.
Software asset management is relevant to many facets of a business - take a look at some of the roles that it can form part of the focus of.
Software vendors come in all shape and sizes - all with their own set of licensing models and rules. We take a look at just a few of them.
As a constantly evolving subject, SAM is not without its challenges. We take a look at some of the most common ones.
Wondering what an investment in SAM could do for your business? Fill out a few details and find out what return you could get!
Answer a few questions about your SAM infrastructure & experience, and we'll put together a personalised recommendation for the future.
A simple health check of what's being used across your Office 365 estate in this FREE, Microsoft backed and easy to setup review.
Just like you would with your vehicle each year, get an annual check up of your software asset management programme.
Overwhelmed by the task of documenting the steps for a successful SAM programme? Get the experts in to help!
Concerned your SAM tools aren't covering your whole estate? Or on the look out for an entirely new tool? Get us in to assist.
Not content with covering all things SAM related, we've teamed up with Capital to provide a comprehensive hardware asset management review.
A simple, one-time reconciliation of the software you have deployed versus the licence entitlement you own.
A regularly scheduled analysis of your organisation's estate, specifically adapted to your needs and budget.
A full appraisal of your Microsoft 365 setup and how best to optimise it through automated recommendations.
An add-on to our SAMplicity One, MOT and Plus offerings, quickly diagnose your ability to migrate your resources to the cloud.
In collaboration with law firm Addleshaw Goddard, ensure the legality of your SAM programme and get assistance with any contract disputes.
Available as standard with SAMplicity Plus, ensure you're compliant if you're unexpectedly audited by a vendor.
We've teamed up with some of the forefront experts in licensing knowledge so you can teach yourself to be an expert too.
Stumped by the continually evolving complexities of SAM? Join us for one of our comprehensive courses, either in-person or online.
It’s chock full of useful advice, exclusive events and interesting articles. Don’t miss out!